Mississippi Bubble (1716–1720)
Background and Market Impact
An asset bubble is characterized by a rapid increase in the value of an asset or group of assets, followed by a swift and violent collapse often known as the moment when the bubble bursts. During an asset bubble, the quoted prices of the underlying assets far outpace their real intrinsic value (what something is worth according to economic fundamentals). The interesting part about asset bubbles is that there are often what could be argued as being rational and irrational participants in these market events. There will be market participants that do not realize that an asset bubble is taking place. These participants usually see outsized wealth (or at least temporary ...
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